How to release Trump's taxes: The New York Legislature can and must act now

By Daniel Hemel

Mar 11, 2019 | 2:15 PM

United States President Donald J. Trump signs the Tax Cut and Reform Bill in the Oval Office at The White House in Washington, DC on December 22, 2017. (BRENDAN SMIALOWSKI / AFP/Getty Images)

For the third consecutive year, law-abiding taxpayers prepare to file their own taxes without any assurance that the President is paying his. Indeed, we have reason to think he is not. His former fixer Michael Cohen says Trump called the IRS “stupid” for giving him a $10 million refund a decade ago. An exposé in the New York Times last year revealed a pattern of audacious tax fraud stretching even further back.

The President’s tax chicanery isn’t simply a Trumpian character flaw (though it appears to be a trait that, like his vast fortune, he inherited from his father Fred). It’s a serious problem for the U.S. tax system. That system, after all, depends largely on voluntary compliance, and voluntary compliance depends upon public confidence. Trump erodes that confidence when he gives off the impression — rightly or wrongly — that the man on top is paying less than those at the bottom.

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Any other President in the past 40 years would have allayed these concerns by releasing his own returns, as every Oval Office occupant since Jimmy Carter has. Trump has brushed off demands that he do the same with excuses that don’t add up.

He has said that his returns are under “routine audit” and he will release them once that is through. But most audits take less than a year, and the IRS’s manual for its examiners requires strict adherence to a 26-month audit time limit. If the returns filed by Trump in 2016 and earlier are still under audit, then that would be anything but “routine.”

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In any event, the IRS’s practice is to audit every President. That didn’t stop Trump’s predecessors from releasing their returns to the public.

House Democrats have responded by passing legislation that would require presidential and vice-presidential candidates to release their last 10 years of returns. But the bill is dead on arrival in Mitch McConnell’s Senate, and it would surely meet a veto pen if it ever crossed Trump’s desk. House Democrats, meanwhile, have the statutory power to demand Trump’s returns from the IRS. But they have been inexplicably slow to exercise that authority, and when they do, it could take months or longer for a likely court battle with the Trump administration to resolve. Initial review of the returns, moreover, would be in a closed-door meeting of the House Ways and Means Committee, not in full public view.

Across the river, the New Jersey Senate has passed a bill that would require presidential candidates to release their returns as a condition for appearing on the ballot in that state in 2020. If that bill becomes law, it too is likely to draw a court fight. And with the Garden State trending increasingly blue, Trump might sidestep the bill by declining to list his name in a state whose Electoral College votes he has only a long shot of winning.

That’s because Trump, as a longtime Empire State resident with a range of business interests in the state, must file returns in New York each year. Those returns don’t include all the same information as his federal filings, but they reveal much of the same material, including how much income he reports in total and whether he erases his tax liability with deductions (genuine or phony). And by showing whether Trump pays any income tax to New York State, the returns might shed light on the President’s decision to cap the state and local tax deduction — or SALT — as part of his 2017 tax legislation. Millions of New Yorkers were harmed by the SALT rollback. But Trump, if he has no state income taxes to deduct, would have been spared most of the blow.

A bill pending in the state Legislature would require the state Department of Taxation and Finance to release the last five years of New York tax returns filed by every official who is elected on a statewide basis. That would include the President and vice president (if they file in New York), plus the state’s U.S. senators, governor, lieutenant governor, controller and attorney general. All of those officials, except for Trump, release their returns already. So far, 86 state assembly members and 32 state senators have signed onto the bill. There are 150 seats in the state assembly and 63 in the state senate. You do the math. If put to a vote, the bill should pass and, with Gov. Cuomo’s signature, would become law.

The bill — spearheaded by Assemblyman David Buchwald of White Plains and Sen. Brad Hoylman of Manhattan, both Democrats — allows state tax officials to redact any information that federal law would bar them from revealing, including, for instance, Trump’s Social Security Number. But federal law would not bar the state from saying how much Trump reports in income to New York, how much he deducts, and how much he ultimately pays to the state.

We deserve to know whether “only the little people pay taxes,” as the late Leona Helmsley famously said, or whether our top elected officials pay their fair share too. Americans are right to demand that tax transparency from their leaders. Trump has no excuse for his delay in releasing his returns. Now Albany has no excuse for delay either.

Hemel is assistant professor of law at the University of Chicago Law School.